Power of Sale

What is Power of Sale?

Power of sale is a legal process used by lenders in several Canadian provinces to recover mortgage debt by selling a defaulting borrower’s property without going through the court system.

Why Power of Sale Matters in Real Estate

Common in Ontario and Nova Scotia, power of sale allows lenders to act more quickly than foreclosure. Once a borrower is in default, the lender can issue notice and, after a waiting period, sell the home to recover the debt.

• Property is sold by the lender, not the court
• Borrower may still owe any shortfall after the sale
• Any surplus funds after debt and costs are paid go to the borrower

This process protects lender rights while offering transparency and oversight. Homeowners in power of sale should seek legal counsel promptly.

Understanding power of sale helps homeowners, investors, and agents navigate distressed property sales and lender recovery procedures.

Example of Power of Sale in Action

After a borrower defaults, their lender exercises power of sale, selling the property to recover the remaining loan balance and legal fees.

Key Takeaways

• Enables lender to sell defaulted property.
• Faster and less costly than foreclosure.
• Common in Ontario and Nova Scotia.
• Borrower may retain surplus after sale.
• Governed by provincial statutes.

Related Terms

• Foreclosure
• Default
• Mortgage Arrears
• Distressed Property
• Judicial Sale